Phil Grossfield's Blog


Bond Blood Bath; Spock Versus Spock

colleen_bookcoverThe Travel Mama’s Guide! My wife, the Travel Mama, has officially launched her book about Vacationing with Babies and Children AND STAYING SANE.

ENTER TO WIN a copy of the book PLUS a $250 Residence Inn by Marriott gift card. Also, save 15% off when you order here through May 31 using this coupon code: DDTFQCU2. Starting in June you can buy the book at Thanks! 🙂

My Schedule: I have a meeting in Carlsbad this morning at 10:30 and another meeting this afternoon.

Spock Versus Spock. Yeah, I’m a Star Trek geek…you got a problem with that? This new Audi spockversusspockcommercial starring Leonard Nimoy (the old Spock) and Zachary Quinto (the new Spock) is awe…wait-for-it…some…AWESOME! You’ve got two Spocks talking smack to each other, cursing by Leonard Nimoy, and an impromptu rendition of the “The Ballad of Bilbo Baggins.” Old Spock Versus New Spock In The Greatest Car Commercial Ever.

My Market Watch: Bond Blood Bath! Bonds are DOWN…AGAIN…HOLY BLOOD BATH BATMAN. Yesterday some lenders repriced for nearly 1.000 worse. Interbank adjusted only 0.250 so our pricing was still competitive by comparison. But this morning with more negative bond activity our pricing dropped another 0.375. In my graphic below you can see how the bond tried to climb early this morning and then dropped all the way to the garage where it finally stopped and retreated slightly. Lord help us if the bond sells below the garage…the next floor down could create another huge drop in pricing.

Yesterday’s decline was due to Fed Chairmen Ben Bernanke’s comments about tapering off Quantitative Easing as soon as next month. quantitive Easing is the Fed’s policy to buy mortgaged back securities and this practice has maintained our low rates for a long time. Put another way, QE has created our artificial market for low rates we’ve all enjoyed. Up until yesterday Bernanke had been unwavering in his commitment to QE…he had been saying forever that the Fed would maintain its policy to purchase MBS through 2013. This gave traders on Wall Street good reason to buy bonds which kept the price low. Low bond prices is why we’ve had low rates and great pricing. Only a month ago he mentioned the Fed might start scaling back the buying. Now, for the first time, he has stepped out onto the ledge. To be fair, Bernanke said as early as next month they would begin reducing the amount of buying, not eliminate it. But all traders heard was a statement contrary to Bernanke’s traditional gospel…let the blood bath begin! My graphic below illustrates what has been happening this morning…bond prices started out high as traders tried to take profits from yesterday’s bath. But then the bond started selling off again dropping the price to the garage…thank goodness for the garage because traders starting buying bonds again. We’re now trading between the Lobby and Garage and we must all pray to the Universe the bond doesn’t fall below the garage…I’m not sure where the next floor is below the garage. The bottom chart highlights the latest market down-trend, courtesy of MBS Highway.




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